FLPs on trial — IRS argues for taxability of transferred assets

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Abstract: This article looks at a recent court case in which the IRS argued that assets transferred to a family limited partnership (FLP) should be included in the transferor’s taxable gross estate. The provisions of the partnership agreement came from a standard form the decedent’s attorney used for such agreements. But, according to the Tax Court, the agreement didn’t necessarily reflect the decedent’s actual, primarily testamentary, reasons for forming the FLP. The court explained the specific reasons why the agreement failed to meet the requirements of an FLP. Citation: Estate of Turner v. Commissioner of Internal Revenue, T.C. Memo. 2011-209, Aug. 30, 2011 (U.S. Tax Court)